Professional indemnity insurance (PII) brokers have again had to calm fears just three weeks before the renewals deadline, as the unrated insurer Berliner appeared “uncertain” it could cover any solicitors’ risk this year.
Germany-based Berliner only entered the market this year, offering to insure firms of all sizes – and is said to have collected around £20m in premiums so far – and the news will come as a further shock to small firms in particular after rated insurer XL pulled out of the market for the smallest firms.
It is likely to drive some business to Chancery Pii, the Law Society’s joint venture with Miller Insurance Services, set up at the end of last month to offer direct, broker-free, access for small firms to three rated insurers.
In a letter to policyholders, drafted with the Financial Conduct Authority, Apro Management, an appointed representative of broker Bar Professions, said: “There is now uncertainty as to whether Berliner will… be in a position to accept any [PII] risks for the year beginning 1 October 2013.”
Premiums already received will be held in a client account “while we seek to resolve the situation” but the letter, signed by Apro directors Ray Watson and Wayne Redgrave, continued: “We consider however, there is some doubt as to whether replacement capacity can be secured in time… customers should consider making alternative arrangements for cover.”
It is understood that many of the 1,300 firms left uninsured when the Latvian insurer, Balva – also brokered by Bar Professions – was barred from the UK market, had their policies transferred to Berliner.
On 2 September, Apro wrote to policyholders saying it was no longer accepting new 2013/14 premiums for insurance underwritten by Berliner.
Colin Taylor, head of risk management at Prime Risk Solutions, part of global insurance broker Willis Group, said there was “now great interest” in its facilities providing cover with rated insurers Liberty, Axis and WR Berkley, among others.
“For any firms affected by this development, time is of the essence and solicitors need to ensure they provide a complete submission for consideration,” he said.
Simon Lovat of broker UIB added: “The potential for about 1,100 practices coming into the market to buy insurance 15 working days before renewal poses a significant challenge to brokers and insurers, who are already working at near capacity. For those firms that are still searching for qualifying insurance, there is the potential that they will have to pay more than they expect to pay this year because of this late development.”
Stuart Dugdill, director of professional liabilities at Manchester-based broker MFL Professional, warned that firms without PII should “act fast but not panic” and should carefully assess any approaches from brokers to avoid those attempting to profit from the tight deadline.
“Firms need to take a view very quickly about getting involved with a broker. Telephone interviews can help to separate an opportunistic broker from one who is going to be able to get you into a couple of markets quickly.”
Mike Perry, a partner at broker JLT, said: “For any firms that are not sure of their position, the best thing you can do today is get another quote to be on the safe side.” He said JLT had “substantial capacity” with rated insurer AmTrust.